Issues and Opportunities Related to the Production and Marketing of Ethanol By-Products Dr. Gerald (Jerry) Shurson Professor Department of Animal Science University of Minnesota
Introduction Processes Used to Produce Ethanol Dry-grind Fastest growing segment of the fuel ethanol industry By-product is primarily distiller s dried grains with solubles (DDGS) Wet mill Produces a variety of products including ethanol e.g. starch, corn oil, high fructose corn syrup Beverage distilleries DDGS Breweries By-product is brewer s dried grains
What Are the Issues/Challenges? 1. Product identity and definition 2. Product variability a. nutrient content b. nutrient digestibility c. physical characteristics 3. Lack of a quality grading system a. difficult sourcing to obtain desired quality and price 4. Lack of standardized testing procedures 5. Need for quality management and certification 6. Transportation 7. Need a high degree of a. research b. education c. technical support 8. International market challenges 9. Lack of a national distiller s by-product organization a. lack of industry cooperation
1. Product Identity and Definition A case of mistaken identity? Customers don t A few sellers always understand nutritional differences among ethanol by-products always know what they are going to get misrepresent quality and nutrient specifications blend DDGS with other ingredients AAFCO definitions need to be revised 15. Brewer s products e.g. brewer s dried grains 27. Distiller s products e.g. distiller s dried grains with solubles 48. Maize e.g. corn gluten feed, corn gluten meal
2. Product Variability Nutrient content Nutrient digestibility Color (amino acid digestibility) Physical characteristics Particle size Bulk density
DDGS Varies Nutrient Content and Digestibility, Color, and Particle Size Among U.S. Sources
Variability (CV, %) of Selected Nutrients Among U.S. DDGS Sources vs. U.S. Soybean Meal Sources Nutrient DDGS Soybean Meal Crude protein 4.5 2.3 Crude fat 17.1 30.9 Crude fiber 18.9 9.5 Ash 27.2 6.6 Lysine 12.1 3.0 Methionine 8.5 5.3 Threonine 5.8 4.2 Tryptophan 12.0 7.3 Calcium 117.5 25.8 Phosphorus 19.4 9.1
Fig. 1. Regression of digestible lys (%) and color (L*, b*) 60 55 50 R 2 = 0.71 L*, b* score 45 40 35 R 2 = 0.74 L* b* Linear (L*) Linear (b*) 30 25 20 0.20 0.30 0.40 0.50 0.60 0.70 0.80 Lys (%) Source: Dr. Sally Noll (2003)
1,200 1,000 800 600 400 200-0 5 10 15 20 25 30 Variation in Particle Size Among DDGS Samples Representing 25 U.S. Ethanol Plants 1/05
1,200 1,000 800 600 400 200-0 5 10 15 20 25 30 Variation in Particle Size Among Soybean Meal Samples Representing 6 U.S. Plants 2003
Product Flowability q q q q Particle size is sometimes too fine Difficult and costly to pellet Minimal cooling or curing time before loading Extensive damage to trucks and rail cars
3. Lack of a Quality Grading System q q q Difficult for buyers to differentiate quality and price Can be as much as $20-$30/ton price differential due to quality in the market What you want isn t always what you get
4. Lack of Standardized Testing Procedures Different labs may use different procedures variable results No referee laboratories have been established DDGS is unique use of ELISA tests for mycotoxins may give false positive results
5. Need for Quality Management and Certification Paradigm shift toward improved DDGS quality and consistency Many commercial feed mills are ISO Certified EU International Feed Ingredient Standard GMP Certification Minnesota DDGS certification program was not accepted by the MN ethanol industry
6. Transportation Railroads no longer allowing use of their cars to transport DDGS DDGS marketers must use their own cars Small ethanol plants don t produce enough DDGS in a short time to use unit trains Limited rail capabilities in Ontario Concern over rail cars returning from Mexico Transloaders in PNW refuse to handle DDGS due to flowability problems
7. Need a High Degree of Research, Education, and Technical Support Additional research is needed to improve DDGS acceptance in the feed industry High degree of education and technical support is required in the market place
8. Export Market Challenges Availability of consistent supply Need system to directly connect customers to suppliers Poor customer service Difficult to find reliable exporters that market high quality DDGS Export market is a dumping ground for low quality U.S. ingredients Tariffs, definitions, and specifications Regulatory concerns GMO GMP certification Antimicrobial residues
9. No National Distiller s By-Product Organization and Coordination The U.S. ethanol industry is comprised of a few large, and many small independent ethanol plants. No single national organization to coordinate and deal with by-product issues and opportunities
Opportunities 1. Develop a national DDGS organization Assemble a national DDGS technical team develop new definitions for distiller s by-products develop standardized laboratory testing procedures develop quality standards by-product vs co-product vs product develop a voluntary national certification program
Potential Categories of Distiller s By-Products Dakota Gold Solulac Corn DDGS < 75% solubles added to grains Dried Distiller s Grains Corn DDGS > 75% solubles added to grains Distiller s By-Products Wet Distiller s Grains High ADF and Ca, Reduced Energy DDGS for Monogastrics High Protein DDGS Golden Lix Corn Condensed Distiller s Solubles Spray Dried Distiller s Solubles Corn/Wheat Blends Corn/ Sorghum Blends Corn - Beverage Distilleries DDGS/Soy Hull Blends
U.S. DDGS Consumption Estimate 2001 Estimate 2002 4% 15 % 36% 60% Dairy Beef Poultry/Swine 5% 45% Dairy Beef Poultry Swine 35% Estimate 2003 Estimate 2004 39% 4% 11% 46% Dairy Beef Poultry Swine 3% 37% 16 % 44% Dairy Beef Poultry Swine CSC 2005
8 Million MT of DDGS Produced in the U.S. Would Disappear If Every broiler, layer, and turkey ate 0.10 lbs/day OR Every beef steer, cow, and calf ate 4.8 lbs/day OR Every dairy cow ate 8 lbs/day OR Every hog ate 0.84 lbs/day
What Does the U.S. Ethanol Industry Need to Do? Determine the commitment to export DDGS Correctly define its products Know your products and how customers can optimize their use Improve customer support and technical assistance Fund research to support current domestic and export market development efforts Implement quality standards to help customers differentiate among sources and prices Implement a national DDGS certification program
www.ddgs.umn.edu